---

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2001
or

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 1-16017

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ORIENT-EXPRESS HOTELS LTD.

(Exact name of registrant as specified in its charter)

Bermuda(State or other jurisdiction of incorporation or organization)

98-0223493(I.R.S. Employer Identification No.)41 Cedar Avenue
P.O. Box HM 1179
Hamilton HMEX, Bermuda(Address of principal executive officers)

(Zip Code)


441-295-2244(Registrant's telephone number, including area code)

---

Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90
days. Yes /x/  No / /

As
of April 30, 2001, 28,440,601 Class A common shares and 20,503,877 Class B common shares of Orient-Express Hotels Ltd. were outstanding, including
18,044,478 Class B shares owned by subsidiaries of Orient-Express Hotels Ltd. and 16,940,601 Class A shares and 2,459,399 Class B shares owned by Sea Containers Ltd.

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PART I

ORIENT-EXPRESS HOTELS LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                                                                    |                   | March 31,
2001 |         | December 31,
2000 |  
|----------------------------------------------------------------------------------- | ----------------- | -------------- | ------- | ----------------- | -
|
|Assets                                                                              |                   |                |         |                   |  
|Cash                                                                                |                   | $              | 23,398  |                   | $
|Accounts receivable, net of allowances of $387 and $422                             |                   |                | 54,966  |                   |  
|Inventories                                                                         |                   |                | 16,096  |                   |  
|                                                                                    |                   |                |         |                   |  
|Total current assets                                                                |                   |                | 94,460  |                   |  
|                                                                                    |                   |                |         |                   |  
|Property, plant and equipment, less accumulated depreciation of $72,674 and $71,159 |                   |                | 541,233 |                   |  
|Investments                                                                         |                   |                | 74,257  |                   |  
|Intangible assets                                                                   |                   |                | 30,200  |                   |  
|Other assets                                                                        |                   |                | 2,305   |                   |  
|                                                                                    |                   |                |         |                   |  
|                                                                                    |                   | $              | 742,455 |                   | $
|                                                                                    |                   |                |         |                   |  
|Liabilities and Shareholders' Equity                                                |                   |                |         |                   |  
|Working capital facilities                                                          |                   | $              | 11,365  |                   | $
|Accounts payable                                                                    |                   |                | 21,992  |                   |  
|Accrued liabilities                                                                 |                   |                | 31,175  |                   |  
|Deferred revenue                                                                    |                   |                | 11,912  |                   |  
|Current portion of long-term debt                                                   |                   |                | 54,318  |                   |  
|                                                                                    |                   |                |         |                   |  
|Total current liabilities                                                           |                   |                | 130,762 |                   |  
|Long-term debt                                                                      |                   |                | 223,959 |                   |  
|Deferred income taxes                                                               |                   |                | 4,986   |                   |  
|                                                                                    |                   |                |         |                   |  
|                                                                                    |                   |                | 359,707 |                   |  
|                                                                                    |                   |                |         |                   |  
|Minority interest                                                                   |                   |                | 5,124   |                   |  
|                                                                                    |                   |                |         |                   |  
|Shareholders' equity:                                                               |                   |                |         |                   |  
|Class A common shares $0.01 par value (120,000,000 shares authorized):              |                   |                |         |                   |  
|                                                                                    | Issued28,440,601 |                |         | 284               |  
|Class B common shares $0.01 par value (120,000,000 shares authorized):              |                   |                |         |                   |  
|                                                                                    | Issued20,503,877 |                |         | 205               |  
|Additional paid-in capital                                                          |                   |                | 228,862 |                   |  
|Retained earnings                                                                   |                   |                | 178,291 |                   |  
|Accumulated other comprehensive income                                              |                   |                | (29,837 | )                 |  
|Less: reduction due to class B common shares owned by subsidiaries 18,044,478      |                   |                | (181    | )                 |  
|                                                                                    |                   |                |         |                   |  
|Total shareholders' equity                                                          |                   |                | 377,624 |                   |  
|                                                                                    |                   |                |         |                   |  
|Commitments                                                                         |                   |                |        |                   |  
|                                                                                    |                   |                |         |                   |  
|                                                                                    |                   | $              | 742,455 |                   | $
|                                                                                    |                   |                |         |                   |  

See
notes to consolidated financial statements.

---

ORIENT-EXPRESS HOTELS LTD. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS

|                                                   |                                     | Three months ended March 31, |       
|-------------------------------------------------- | ----------------------------------- | ---------------------------- | ------
|
|
|Revenue                                            |                                     | $                            | 55,707
|Earnings from unconsolidated companies             |                                     |                              | 2,204 
|                                                   |                                     |                              |       
|                                                   |                                     |                              | 57,911
|                                                   |                                     |                              |       
|Expenses:                                          |                                     |                              |       
|                                                   | Depreciation and amortization       |                              |       
|                                                   | Operating                           |                              |       
|                                                   | Selling, general and administrative |                              |       
|                                                   |                                     |                              |       
|Total expenses                                     |                                     |                              | 47,234
|                                                   |                                     |                              |       
|Earnings from operations before net finance costs  |                                     |                              | 10,677
|Interest expense, net                              |                                     |                              | (5,096
|Interest and related income                        |                                     |                              | (15   
|                                                   |                                     |                              |       
|Net finance costs                                  |                                     |                              | (5,111
|                                                   |                                     |                              |       
|Earnings before income taxes                       |                                     |                              | 5,566 
|Provision for income taxes                         |                                     |                              | 674   
|                                                   |                                     |                              |       
|Net earnings                                       |                                     | $                            | 4,892 
|                                                   |                                     |                              |       
|Net earnings per class A and class B common share: |                                     |                              |       
|                                                   | Basic and diluted                   |                              | $     
|                                                   |                                     |                              |       

See
notes to consolidated financial statements.

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ORIENT-EXPRESS HOTELS LTD. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS

|                                          |                                                                                     | Three months ended March 31,                                           |        
|----------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | -------
|
|
|Cash flows from operating activities:     |                                                                                     |                                                                        |        
|                                          | Net earnings                                                                        |                                                                        | $      
|                                          |                                                                                     |                                                                        |        
|                                          | Adjustments to reconcile net earnings to net cash provided by operating activities: |                                                                        |        
|                                          |                                                                                     | Depreciation and amortization                                          |        
|                                          |                                                                                     | Undistributed (earnings)/losses of affiliates and other non-cash items |        
|                                          | Change in assets and liabilities net of effects from acquisition of subsidiaries:   |                                                                        |        
|                                          |                                                                                     | Increase in accounts receivable                                        |        
|                                          |                                                                                     | Increase in inventories                                                |        
|                                          |                                                                                     | Increase in accounts payable                                           |        
|                                          |                                                                                     |                                                                        |        
|                                          | Total adjustments                                                                   |                                                                        |        
|                                          |                                                                                     |                                                                        |        
|Net cash provided by operating activities |                                                                                     |                                                                        | 7,069  
|                                          |                                                                                     |                                                                        |        
|Cash flows from investing activities:     |                                                                                     |                                                                        |        
|                                          | Capital expenditures                                                                |                                                                        |        
|                                          | Acquisitions and investments, net of cash acquired                                  |                                                                        |        
|                                          | Proceeds from sale of fixed assets and other                                        |                                                                        |        
|                                          |                                                                                     |                                                                        |        
|Net cash used in investing activities     |                                                                                     |                                                                        | (17,153
|                                          |                                                                                     |                                                                        |        
|Cash flows from financing activities:     |                                                                                     |                                                                        |        
|                                          | Net proceeds from working capital facilities and redrawable loans                   |                                                                        |        
|                                          | Issuance of long-term debt                                                          |                                                                        |        
|                                          | Principal payments under long-term debt                                             |                                                                        |        
|                                          | Movement in SCL investment                                                          |                                                                        |        
|                                          |                                                                                     |                                                                        |        
|Net cash provided by financing activities |                                                                                     |                                                                        | 18,145 
|                                          |                                                                                     |                                                                        |        
|Total cash flows                          |                                                                                     |                                                                        | 8,061  
|Effect of exchange rate changes on cash   |                                                                                     |                                                                        | (552   
|                                          |                                                                                     |                                                                        |        
|Net increase/(decrease) in cash           |                                                                                     |                                                                        | 7,509  
|Cash at beginning of period               |                                                                                     |                                                                        | 15,889 
|                                          |                                                                                     |                                                                        |        
|Cash at end of period                     |                                                                                     | $                                                                      | 23,398 
|                                          |                                                                                     |                                                                        |        

See
notes to consolidated financial statements.

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ORIENT-EXPRESS HOTELS LTD. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY

|                         |                                              | Class A Common Shares at Par Value |     | Class B Common Shares at Par Value |   | Additional Paid-In Capital |  | Retained Earnings |         | Accumulated Other Comprehensive Income (Loss) |   | Common Shares Held by Subsidiaries |       | Total Comprehensive Income |        
|------------------------ | -------------------------------------------- | ---------------------------------- | --- | ---------------------------------- | - | -------------------------- |  | ----------------- | ------- | --------------------------------------------- | - | ---------------------------------- | ----- | -------------------------- | -------
|
|Balance, January 1, 2001 |                                              | $                                  | 284 |                                    | $ | 205                        |  | $                 | 228,862 |                                               | $ | 173,399                            |       | $                          | (23,852
|Comprehensive income:    |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                    |       |                            |        
|                         | Net earnings on common shares for the period |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                    | 4,892 |                            |        
|                         | Other comprehensive income (loss)            |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                    |       |                            |        
|                         |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                    |       |                            |        
|Balance, March 31, 2001  |                                              | $                                  | 284 |                                    | $ | 205                        |  | $                 | 228,862 |                                               | $ | 178,291                            |       | $                          | (29,837
|                         |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                    |       |                            |        

See
notes to consolidated financial statements.

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ORIENT-EXPRESS HOTELS LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of financial statement presentation

(a) Accounting policies

Orient-Express Hotels Ltd. (the "Company") is a majority-owned subsidiary of Sea Containers Ltd. ("SCL"). The Company and its
subsidiaries are referred to collectively as "OEH".

For
a description of significant accounting policies and basis of presentation, see Notes 1 and 13 to the consolidated financial statements in the 2000 Form 10-K
annual report.

In
the opinion of management, all adjustments necessary for a fair statement of the results of operations for the three months ended March 31, 2001 and 2000, which are all of a
normal recurring nature, have been reflected in the information provided.

(b) Net earnings per share

The number of shares used in computing basic and diluted earnings per share was as follows:

Three months ended March 31,2001

2000(In thousands)Basic

30,900

25,900Diluted

30,911

25,900


(c) Accounting change

Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", issued by the Financial Accounting Standards Board as amended by SFAS No. 137 and No. 138. SFAS No. 133 requires OEH to record all
derivatives, whether designated in hedging relationships or not, on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the
derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value
of the derivative are recorded as a component of accumulated other comprehensive income (loss) in shareholders' equity and are recognized in the statement of consolidated operations when the hedged
item affects earnings. The ineffective portion of a hedging derivative's change in the fair value will be immediately recognized in earnings.

The
initial adoption of SFAS No. 133 resulted in an unrealized loss of $1,239,000 in accumulated other comprehensive income (loss) as of January 1, 2001. For the three
months ended March 31, 2000, the change in the fair market value of derivative instruments resulted in a charge to other comprehensive income (loss) of $495,000.

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The components of comprehensive income (loss) are as follows:

|                                                                                             |  | Three months ended March 31, |       
|-------------------------------------------------------------------------------------------- |  | ---------------------------- | ------
|
|
|Net earnings on common shares                                                                |  | $                            | 4,892 
|Other comprehensive income (loss):                                                           |  |                              |       
|Foreign currency translation adjustments                                                     |  |                              | (4,604
|Cumulative effect of change in accounting principle (SFAS 133) on other comprehensive income |  |                              | (1,239
|Changes in fair value of derivatives                                                         |  |                              | (495  
|(Gains)/losses reclassified into earnings from other comprehensive income, net               |  |                              | 353   
|                                                                                             |  |                              |       
|Comprehensive (loss) income                                                                  |  | $                            | (1,093
|                                                                                             |  |                              |       

2. Acquisitions and investments

On January 17, 2001, OEH acquired the Miraflores Park Plaza in Lima, Peru for approximately $17,000,000. The price was paid largely by the assumption of
existing debt, with the balance paid in cash and the issuance of notes to the seller. OEH's 50/50 hotel joint venture in Peru has an option to purchase the hotel at cost which, when exercised, will
result in OEH becoming the exclusive long-term manager of the hotel. The results of the operation have been included in the consolidated financial results of OEH from the date of
acquisition.

3. Property, plant and equipment

The major classes of real estate and other fixed assets are as follows:

March 31,
2001

December 31,
2000(Dollars in thousands)Freehold and leased land and buildings

$
432,113

$
437,094Machinery and equipment


104,002


104,335Fixtures, fittings and office equipment


61,674


62,400River cruiseship


16,118


16,118613,907


619,947Less: accumulated depreciation


72,674


71,159$
541,233

$
548,788


At
March 31, 2001 and December 31, 2000, the balance for machinery and equipment under capital lease was $1,686,000 (December 31, 2000$1,877,000) and
for fixtures and fittings under capital lease was $342,000 (December 31, 2000$247,000). Accumulated depreciation related to assets under capital lease at March 31, 2001 was
$402,000 (December 31, 2000$441,000).

---

4. Long-term debt

Long-term debt consists of the following:

|                                                                                                                                                                                                        |  | March 31,
2001 |         | December 31,
2000
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | -----------------
|
|Loans from banks secured by property, plant and equipment payable over periods of 1 to 12 years, with a weighted average interest rate of 6.47 and 6.94 percent, respectively, primarily based on LIBOR |  | $              | 276,903 |                  
|Loan secured by a river cruiseship payable over 5 years, with a weighted average interest rate of 7.30 and 8.50 percent, respectively, based on LIBOR                                                   |  |                | 532     |                  
|Obligations under capital lease                                                                                                                                                                         |  |                | 842     |                  
|                                                                                                                                                                                                        |  |                |         |                  
|                                                                                                                                                                                                        |  |                | 278,277 |                  
|Less: current portion                                                                                                                                                                                   |  |                | 54,318  |                  
|                                                                                                                                                                                                        |  |                |         |                  
|                                                                                                                                                                                                        |  | $              | 223,959 |                  
|                                                                                                                                                                                                        |  |                |         |                  

The
following is a summary of the aggregate maturities of long-term debt, excluding obligations under capital leases, at March 31, 2001:

Year ending December 31,(Dollars in thousands)Remainder of 2002

$
42,3862003


21,5782004


85,6262005


29,2152006 and thereafter


44,633$
223,438


The
interest rates on substantially all of OEH's long-term debt are adjusted regularly to reflect current market rates. Accordingly, the carrying amounts of OEH's
long-term debt also approximate fair value.

5. Income taxes

Income taxes provided by OEH relate principally to its foreign subsidiaries as pre-tax income is primarily foreign. The provision for income taxes
consisted of the following:

Three months ended March 31, 2001Current

Deferred

Total(Dollars in thousands)United States

$
309

$
150

$
459Other foreign


707


(492
)

215$
1,016

$
(342
)
$
674


---

Three months ended
March 31, 2000Current

Deferred

Total(Dollars in thousands)United States

$
342

$
200

$
542Other foreign


963


(990
)

(27
)$
1,305

$
(790
)
$
515


The
Company is incorporated in Bermuda, which does not impose an income tax. OEH's effective tax rate is entirely due to the income taxes imposed by jurisdictions in which OEH
conducts business other than Bermuda.

Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes. The following represents OEH's net deferred tax liabilities:

|                                                           |  | March 31, 2001 |         | December 31, 2000 |  
|---------------------------------------------------------- |  | -------------- | ------- | ----------------- | -
|
|Gross deferred tax assets (operating loss carry forwards). |  | $              | 41,979  |                   | $
|Less: Valuation allowance                                  |  |                | (25,540 | )                 |  
|                                                           |  |                |         |                   |  
|Net deferred tax assets                                    |  |                | 16,439  |                   |  
|Deferred tax liabilities                                   |  |                | (21,425 | )                 |  
|                                                           |  |                |         |                   |  
|Net deferred tax liabilities                               |  | $              | (4,986  | )                 | $
|                                                           |  |                |         |                   |  

The
deferred tax assets consist primarily of tax loss carryforwards. The deferred tax liabilities consist primarily of differences between the tax basis of depreciable assets versus
the adjusted basis as reflected in the financial statements.

6. Supplemental cash flow information

Three months
ended
March 31,2001

2000(Dollars in thousands)Cash paid for:Interest

$
4,647

$
4,646Income taxes

$
2,281

$
2,396


7. Commitments

Outstanding contracts to purchase fixed assets were approximately $25,000,000 at March 31, 2001 (December 31, 2000$32,000,000).

---

8. Information concerning financial reporting for segments and operations in different geographical areas

As reported in the Company's 2000 Form 10-K annual report, OEH has two business segments, (i) hotels and restaurants and
(ii) tourist trains and cruises. Financial information regarding these business segments is as follows:

Three months
ended
March 31,2001

2000(Dollars in thousands)Revenue:Hotels and restaurants

$
49,789

$
47,277Tourist trains and cruises


5,918


5,332$
55,707

$
52,609Earnings from unconsolidated companies:Hotels and restaurants

$
1,470

$
1,213Tourist trains and cruises


734


221$
2,204

$
1,434Depreciation and amortization:Hotels and restaurants

$
3,418

$
3,105Tourist trains and cruises


511


442$
3,929

$
3,547Earnings/(losses) from operations before net finance costs:Hotels and restaurants

$
13,343

$
13,012Tourist trains and cruises


(365
)

(992
)12,978


12,020Central selling, general and administrative costs


(2,301
)

(2,364
)10,677


9,656Net finance costs(1)


(5,111
)

(5,260
)Earnings before income taxes


5,566


4,396Provision for income taxes


674


515Net earnings

$
4,892

$
3,881Capital expenditure:Hotels and restaurants

$
9,458

$
8,034Tourist trains and cruises


719


2,646$
10,177

$
10,680


March 31, 2001

December 31, 2000Identifiable assets:Hotels and restaurants

$
659,510

$
644,517Tourist trains and cruises


82,945


81,359$
742,455

$
725,876


---

---

Financial
information regarding geographic areas based on the location of properties is as follows:

Three months
ended
March 31,2001

2000(Dollars in thousands)Revenue:Europe

$
12,810

$
12,603North America


24,940


24,686Rest of the world


17,957


15,320$
55,707

$
52,609


March 31, 2001

December 31, 2000Long-lived assets, at book value:Europe

$
223,153

$
224,869North America


185,612


185,201Rest of the world


206,725


205,691$
615,490

$
615,761


9. Related party transactions

For the three months ended March 31, 2001, OEH paid subsidiaries of SCL $1,406,000 (2000$1,374,000) for the provision of various services
provided under a shared services agreement between OEH and
SCL. These amounts have been included in selling, general and administrative expenses, and the unpaid net amount of $4,300,000 at March 31, 2001 is included in accounts payable.

SCL
has guaranteed an aggregate principal amount of $215,688,000 of bank loans to OEH outstanding at March 31, 2001 (December 31, 2000$236,812,000),
including a bank loan of $7,500,000 to Charleston Center LLC, owner of Charleston Place Hotel, and a $2,000,000 bank loan to Eastern & Oriental Express Ltd. in which OEH has minority
shareholder interests.

10. Subsequent event (unaudited)

On April 27, 2001, OEH acquired the Bora Bora Lagoon Resort in French Polynesia, a hotel previously managed by OEH, for a cash price of approximately
$19,600,000. OEH plans to fund most of the purchase price with bank mortgage finance.

---

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Results of Operations

OEH's operating results for the three months ended March 31, 2001 and March 31, 2000, expressed as a percentage of revenue, were as follows:

Three months
ended March 31,2001

2000Revenue:Hotels and restaurants

89
%
90
%Tourist trains and cruises

11

10100

100Expenses:Depreciation and amortization

7

7Operating

45

43Selling, general and administrative

29

32Net finance costs

9

10Earnings before income taxes

10

8Provision of income taxes

2

1Net earnings as a percentage of total revenue

8
%
7
%


The
revenues and earnings before interest, tax, depreciation and amortization (EBITDA) of OEH's operations for the three months ended March 31, 2001 and March 31, 2000
are analyzed as follows:

Three months
ended
March 31,2001

2000(Dollars in millions)Revenue:Owned Hotels:Europe

$
9.1

$
9.3North America


19.3


18.6Rest of the world


15.5


12.9Hotel management interests


2.5


2.4Restaurants


4.8


5.2Tourist trains and cruises


6.7


5.6Total

$
57.9

$
54.0EBITDA:Owned Hotels:Europe

$
(0.1
)
$
(0.3
)North America


7.3


7.6Rest of the world


6.1


5.1Hotel management interests


2.5


2.4Restaurants


1.0


1.4Tourist trains and cruises


0.1


(0.6
)Central overheads


(2.3
)

(2.4
)Total EBITDA

$
14.6

$
13.2


---

Three Months Ended March 31, 2001 Compared To Three Months Ended March 31, 2000

Revenue

Total revenue, including earnings from unconsolidated companies, increased by $3.9 million, or 7%, from $54.0 million in the three months ended
March 31, 2000 to $57.9 million in the three months ended March 31, 2001. Hotels and restaurants revenue increased by $2.8 million, or 6%, from $48.5 million in the
three months ended March 31, 2000 to $51.3 million in the three months ended March 31, 2001, and tourist trains and cruises increased by $1.1 million, or 20%, from
$5.6 million for the three months ended March 31, 2000 to $6.7 million for the three months ended March 31, 2001.

The
revenue increase for hotels and restaurants was primarily due to an increase at OEH's owned hotels of $3.0 million, or 7%, from $41.0 million in the three months
ended March 31, 2000 to $44.0 million in the three months ended March 31, 2001. This increase is analyzed regionally as follows:

Europe.Seasonally this is the lowest quarter for the European hotels. Revenue decreased by $0.2 million from
$9.3 million for the three months ended March 31, 2000 to $9.1 million for the three months ended March 31, 2001. The reported revenues were impacted by the weaker European
euro against the U.S. dollar in the first quarter of 2001 against the prior year period as the European hotels' revenues are earned in currencies linked with the euro. REVPAR on a comparable basis
increased by 6% in local currencies in the three months ended March 31, 2001 compared to the three months ended March 31, 2000.

North America.Revenue increased by $0.7 million, or 4%, from $18.6 million in the three months ended
March 31, 2000 to $19.3 million in the three months ended March 31, 2001. On a comparable basis, revenue decreased by $0.5 million, or 4%. This was primarily at the Windsor
Court. The revenues at La
Samanna are not comparable as the property was closed for part of the first quarter of 2000 following hurricane damage.

Rest of the World.Revenue increased by $2.6 million, or 20%, from $12.9 million in the three months
ended March 31, 2000 to $15.5 million in the three months ended March 31, 2001 primarily as a result of the acquisition of the Observatory and Lilianfels Hotels in 2000. Revenue
on a comparable basis decreased by $0.7 million, or 6%, which was entirely due to the South African properties which were impacted by the weakening of the South African rand, in which the
hotels price their rooms, against the U.S. dollar by over 20% in the first quarter of 2001 over the prior year period.

Depreciation and Amortization

Depreciation and amortization increased by $0.4 million, or 11%, from $3.5 million in the three months ended March 31, 2000 to
$3.9 million in the three months ended March 31, 2001. This increase was primarily attributed to the effect of acquisitions made in 2000.

Operating Expenses

Operating expenses increased by $2.6 million, or 11%, from $23.7 million in the three months ended March 31, 2000 to $26.3 million
in the three months ended March 31, 2001. The increase was due to the new properties acquired in 2000 and the effects of inflation, partially offset by the translation of the operating costs of
the European owned hotels whose operating costs are largely derived in euro denominated currencies. The weakening of the euro against the U.S. dollar favorably impacted the reported U.S. dollar
operating costs of these hotels compared to the three months ended March 31, 2000.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $0.1 million due to the impact of the weakening of the euro and translation of euro
denominated costs on OEH's European hotels, partly offset by the new properties acquired in 2000.

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Earnings from Operations

Earnings from operations increased by $1.0 million, or 11%, from $9.7 million in the three months ended March 31, 2000 to
$10.7 million in the three months ended March 31, 2001. Earnings from operations represent total revenue less depreciation and amortization, operating expenses and selling, general and
administrative expenses.

Net Finance Costs

Net finance costs decreased by $0.1 million primarily due to repayment of debt out of the proceeds of the Company's initial public offering of shares in
August 2000, partly offset by increases in debt relating to capital expenditures and acquisitions financed in 2000.

Taxes on Income

The provision for income taxes increased by $0.2 million, or 30%, from $0.5 million in the three months ended March 31, 2000 to
$0.7 million in the three months ended March 31, 2001. OEH is incorporated in Bermuda, which does not impose an income tax. Accordingly, the entire income tax provision was attributable
to income tax charges incurred by subsidiaries operating in jurisdictions that impose an income tax. The increase of $0.2 million was due to increased profitability of these subsidiaries.

Net Earnings

Net earnings increased by $1.0 million, or 26%, from $3.9 million in the three months ended March 31, 2000 to $4.9 million in the
three months ended March 31, 2001. Net earnings represents earnings from operations less net finance costs and provision for income taxes.

Liquidity and Capital Resources

Working Capital

OEH had cash of $23.4 million at March 31, 2001, a $7.5 million increase from $15.9 million at December 31, 2000. At
March 31, 2001 and December 31, 2000, the undrawn amounts available to OEH under its short-term lines of credit were $8.0 million and $12.3 million,
respectively. In addition, following the refinancing of the American properties referred to below, there were additional facilities of $61.5 million. Current assets less current liabilities,
including the current portion of long-term debt, resulted in a working capital deficit of $36.3 million at March 31, 2001, an increase in the working capital deficit of
$0.1 million from a deficit of $36.2 million at December 31, 2000. The overall decrease in working capital was comprised of the following:



OEH's
business does not require the maintenance of significant inventories or receivables and, therefore, working capital is not the most appropriate measure of liquidity.

Cash Flow

Operating Activities:Net cash provided by operating activities decreased by $1.6 million to $7.1 million
for the three months ended March 31, 2001, from cash provided by operating activities of $8.6 million for the three months ended March 31, 2000.

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Investing Activities:Cash used in investing activities decreased by $36.5 million to $17.2 million for
the three months ended March 31, 2001, compared to $53.6 million for the three months ended March 31, 2000. The principal component of this decrease was a $36.0 million
decrease in acquisitions during the period from $43.0 million to $7.0 million. The expenditure on acquisitions in the three months ended March 31, 2000 included
$40.0 million related to the purchase of the Observatory and Lilianfels Hotels in Australia.

Financing Activities:Cash provided from financing activities for the three months ended March 31, 2001 was
$18.1 million compared to cash provided from financing activities of $44.0 million for the three months ended March 31, 2000, a decrease of $25.9 million. This was
primarily due to a reduction in the issuance of long term debt resulting from the acquisitions. OEH raised net proceeds of $85.5 million from the initial public offering of its shares in
August 2000. The proceeds of this offering were used to repay debt secured on three hotels (Windsor Court, Keswick Hall and Inn at Perry Cabin) and a restaurant ('21' Club). Keswick Hall, the
Inn at Perry Cabin and the '21' Club were refinanced during the first quarter of 2001 with a $35 million facility. The refinancing of the Windsor Court was completed early in the second quarter
of 2001 with a $52 million facility.

Capital Commitments:There were $25.0 million of capital commitments outstanding as of March 31, 2001,
including the acquisition of the Bora Bora Lagoon Resort completed early in the second quarter of 2001 for $19.6 million.

Indebtedness

At March 31, 2001, OEH had $278.3 million of consolidated long-term debt, including the current portion, which is payable over
periods of one to 12 years with a weighted average interest rate of 6.47%. See Note 4 to the Financial Statements regarding the maturity of long-term debt. Approximately 45%
of the outstanding principal was drawn in European euros at March 31, 2001, and the balance primarily drawn in U.S. dollars. At March 31, 2001, OEH had the equivalent of
$103 million of floating rate euro debt which had been swapped into fixed rate euro debt which will convert back to floating rates in September 2002. At March 31, 2001, all other
borrowings of OEH were in floating interest rates.

Liquidity

OEH plans to increase its capital expenditures over the next few years by the expansion of existing hotel properties and the acquisition of additional
properties consistent with its growth strategy. At March 31, 2001, OEH had capital commitments of $25.0 million relating to a number of projects including the acquisition of the Bora
Bora Lagoon Resort for $19.6 million completed in April 2001. OEH expects to have available cash from operations, the proceeds from refinancing the assets referred to above, and other
sources of debt finance sufficient to fund its working capital requirements, capital expenditures, acquisitions and debt service for the foreseeable future.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

OEH is exposed to market risk from changes in interest rates and foreign currency exchange rates. These exposures are monitored and managed as part of its
overall risk management program, which recognizes the unpredictability of financial markets and seeks to mitigate material adverse effects on consolidated earnings. OEH does not hold market rate
sensitive financial instruments for trading purposes.

The
market risk relating to interest rates arises mainly from the financing activities of OEH. Earnings are affected by changes in interest rates on floating rate borrowings,
principally based on U.S. dollar LIBOR and EURIBOR, and on short-term cash investments. In September 2000, OEH entered into an interest rate swap, which exchanged floating rate euro
debt for fixed rate euro debt in respect of the equivalent of euro 117 million ($103 million at March 31, 2001). If interest rates increased by ten percent with respect to
remaining floating rate debt, with all other variables held constant, annual net finance costs of OEH would have increased by approximately $1.2 million based on borrowings at

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March 31, 2001. The interest rates on substantially all of OEH's long-term debt are adjusted regularly to reflect current market rates. Accordingly, the carrying amounts approximate
fair value. The fair value of the interest rate swap at March 31, 2001 was $103 million.

The
market risk relating to foreign currencies and its effects have not changed materially during the first quarter of 2001 from those described in the Company's 2000
Form 10-K report.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of OEH's adoption of recent accounting pronouncements, see Note 1(c) to the Financial Statements.

PART II

ITEM 1. Legal Proceedings

As reported in Note 11(b) of the financial statements of the Company included in its Form 10-K annual report for the year ended
December 31, 2000, the Company has been named defendant in a lawsuit by holders of four series of publicly traded senior notes of Sea Containers Ltd. There was no significant development
in that lawsuit during the first quarter of 2001. Other than this noteholder litigation, the Company is involved in no material legal proceedings, other than ordinary routine litigation incidental to
its business.

ITEM 6. Exhibits and Reports on Form 8-K





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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

| |  | ORIENT-EXPRESS HOTELS LTD.
| |  | --------------------------
| |  | By:                       

Dated: May 11, 2001

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